Good day, and welcome to the NorthWestern Energy Corporation third quarter 2013 financial results conference call. Today's conference is being recorded. At this time, I'd like to turn the conference over to Mr. Travis Meyer. Please go ahead.

Thank you, Jennifer. Good afternoon and welcome to NorthWestern Corporation's financial results conference call and webcast for the quarter ended September 30, 2013. NorthWestern's results have been released and the release is available on our website at www.northwesternenergy.com. We've also filed our 10-Q after market, yesterday. If you're joining us on this call via webcast and you joined early, you may want to refresh your browser, if you aren't seeing the introduction slide. Joining us on the call today are Bob Rowe, President and CEO; Brian Bird, Vice President and Chief Financial Officer; Heather Grahame, Vice President and General Counsel; Kendall Kliewer, Vice President and Controller; John Hines, Vice President of Energy Supply; and myself Travis Myers. Before I turn the call over for us to begin, please note that the company's press release, this presentation, comments by presenters and responses to your questions may contain forward-looking statements. As such I need to remind you of our Safe Harbor language. During the course of this presentation there will be forward-looking statements within the meaning of the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements often address our expected future business and financial performance, and often contain words such as expects, anticipates, intends, plans, believes, seeks, or will. The information in this presentation is based upon our current expectations as of the date hereof unless otherwise noted. Our actual future business and financial performance may differ materially and adversely from our expectations expressed in any forward-looking statements. We undertake no obligation to revise or publicly update our forward-looking statements or this presentation for any reason. Although our expectations and beliefs are based on reasonable assumptions, actual results may differ materially. The factors that may affect our results are listed in certain of our press releases and disclosed in the company's public filings with the SEC. Following our presentation, those who are joining us by teleconference will be able to ask questions. The archived replay of today's webcast will be available beginning at 6:00 PM Eastern Time today and can be found on our website under, Our Company, Investor Relations, Presentations and Webcasts. To access the audio replay of the call, dial 888-203-1112, then access code 8605196. Again that's access code 8605196. I'll now turn it over to our President and CEO, Bob Rowe.

Thank you, very much. And thank you all for joining us. As those of you who participate in these calls regularly know we always move our Board of Directors meetings around to different locations in our service territory. This week we are in Great Falls, Montana. And I'm going to tell you just a word or two about where we are. Great Falls sits where the Missouri River comes heading north out of the Rocky Mountains, out of the gates of the mountain. Then eventually of course heads east and then south into our South Dakota service territory. That when Lewis and Clark came to here, well over 100 years ago, they ran into a five enormous waterfalls. And it was the most challenging part of their trip by far, ultimately they had to portage around the falls that took about a month, and that prickly pears tore up their moccasins. But as bright people many years later figured out, it's a tremendous place to build hydroelectric dams. And although this board meeting was scheduled, literally several years ago to be here, it was a wonderful coincidence that we were announcing the acquisition of the hydroelectric facilities in Montana just a couple of weeks ago, and we're meeting here in Great Falls, which has so much history on our electric system, and where several of those key facilities are located. So as it's always the case, we started the week with a community meeting, extraordinarily well attended by community leaders and citizens. And there was just a tremendous amount of enthusiasm in the community for our announced purchase of the facilities. And then we continued with the board meeting this morning, had a great breakfast meeting with the Great Falls division employees and will be concluding a week with an…

Thanks Bob. In terms of our summary of financial results for the three months ended September 30, 2013, our net income was $15.6 million, were $19.4 million higher than last years $3.8 million loss. Pre-tax income for that period was $17.5 million, nearly $30 higher than the same quarter last year. Two large items did impact last year's third quarter results. The first being $11.4 million Dave Gates Generating Station revenue deferral associated with the FERC ALJ decision. And also a $24 million MSTI impairment charge we took in the third quarter last year. More discussion on the components of our third quarter results will be on slides as follows. On the Slide, we also do show our nine months results, ended September 30, 2013. Here we have net income of $67.9 million or approximately $28 million higher than the $39.7 million for the three quarters ended September 30, 2012. The main drivers for our results year-to-date 2013 are, for gross margin we are up about $30.5 million from added gas production; Spion Kop and takes into the consideration the Dave Gates Generating Station deferral last year; we are also have higher electric and gas transmission capacity this year; increased gas volumes; and also takes consideration the natural gas rate increase we had in Montana. Regarding operating expenses, they were down approximately $2.6 million. We did have increased operating, general and administrative expenses, property taxes and depreciation, but they were more than offset by the $24 million MSTI impairment that occurred in 2012. These items result in a $33 million improvement in operating income 2013 versus 2012. This combined with the $3.7 million increase in other income, offset by $1.4 million increase in interest expense, result in a $35 million improvement in pre-tax income. Income taxes were $7 million higher…

Thanks, Brian. And that was a nice little teaser for the year EEI Financial Conference and we do hope to see you folks there. I'm going to start with one of our recurring subject, the FERC DGGS decision. Let me preface that by saying that the Dave Gates Generating Station, as most of you know, is regulating resource based in Montana and it is providing 100% of the regulation needs for our Montana Balancing Authority. The issue, as I have to go in back now over a year, to September '12, FERC Administrative Law Judge issued a non-binding decision, allocating only a fraction of the amount of revenue that we believe should be allocated to FERC jurisdictional customers. The FERC commissioners are not obligated to follow any of the Administrative Law Judge's finding. As you know, we did file a request for reconsideration many months ago and are still awaiting a decision from the commission. Once we receive the decision, if we disagree, with all the part of it, we may pursue our rights through the U.S. Court of Appeal and that could extend the matter even longer. We've deferred cumulative revenues of $22.5 million, as of September 30, and we continue to defer revenue of about $700,000 a month. And we'll continue to bill our FERC jurisdictional customer's interim rates that have been in effect now since January '11, and these interim rates are subject to refund plus interest. Again, most importantly the plant is providing all of our regulation resources and has proved itself as a good asset. Staying with some of our regular supply updates and turning to environmental compliance activity. Big Stone, as most of you know, we own 23.5%, it's a 475 megawatt coal plant. We've been describing our efforts in the air quality control,…

(Operator Instructions) And we will go to Brian Russo with Ladenburg Thalmann.

Just Slide 25, the financing strategy. So up to $400 million of external equity, how are you calculating the $50 million of free cash flows?

Brian, you want to provide some more color on that.

The issue is each year, as you know, we put out cash flow from operations and we're not obviously utilizing all of that to finance the capital we have. We usually have excess free cash. So a component of that free cash flow will be allocated to this project.

And then, on the 2014 drivers, just no mention of the Montana electric rate case or it's kind of base case scenario that you won't file?

Our regulatory focus is going to be in Montana on the pre-approval filing for the acquisition of the hydros.

Are you confident or comfortable that you can earn close to your allowed returns without the electric rate case?

At this point, I think so. That's something obviously we evaluate at the start of every year.

And I know I have misunderstood you earlier, but you mentioned that cost associated with the hydro transaction, you hope to offset them with income. I'm a little confused. Will there be any regulatory lag from when these assets are acquired versus when you seek recovery or is it going to be pretty much simultaneous?

We will incur hydro-related legal and professional fees throughout the year. There will be even amortization, if you will, of the Bridge financing upfront cost associated to that. So those costs will be incurred throughout all of 2014. The comment I made is, hopefully we have income, of course, to offset that. And that means that we have a favorable regulatory commission and thus approval of the transaction and once that approval is received, it would be our expectation that the asset be put immediately into rate base that we would be earning on those assets. And so when I said, hopefully having income to offset those expenses, I meant was a favorable transaction outcome and approval.

And then just lastly again back on the financing plan. If you were to issue, I mean if the mix is $400 million of external equity and $500 million of debt, does that put you kind of at the low-end of the 50% to 55% debt target ratio or at the high-end? And any color on that?

I'll put it in this context. You can't ignore the fact that we continue to have earning contribution and impacts the equity portion of our balance sheet. But our view is we're going to finance this transaction very close to our stated capital structure, at certainly within the 50% to 55% debt-to-capital we have the company, but very close to capital structure that we utilize in Montana today.

And was that 52-plus percent?

In that ballpark to 52% debt.

We'll go next to Jonathan Reeder with Wells Fargo.

One question regarding, I guess MPSC or MPSC's approval for the Havre pipeline. In the Q, you're saying that you need to get, I guess agreement extended with Devon Energy and everything, is there any reason to believe that that wouldn't get extended or anything like that that being obstacle to getting the transaction completed?

We're very comfortable with where we sit with Devon right now. And I think Montano Commission understands the importance of the timely outcome there.

So it's just, I guess they weren't expecting to need approval and that's what's kind of pushed them back, but everyone is still on board?

It's on board.

And then also in the Q you had said that I guess the Public Service Commission express concern with the policy of continuing to allow DSM lost revenue recovery and that I guess the burden of truth is now on NorthWestern to justify it. Can you kind of I guess go into a little detail what brought this about and is this going to be potentially like an $8 million or roughly $0.12 kind of annual negative impact, if that's no longer valid?

A little bit of history there. The lost revenue adjustment mechanism wasn't approved by a previous commission. So this commission hasn't really had an opportunity to look at it from a policy perspective. We're looking forward to actually seeing the final order from the commission and what their specific language is. We would want to get the LRAM, the lost revenue adjustment mechanism, framed as a formal issue for the commission's consideration and for all parties to comment on as early as possible and that could be as an issue parities have called on to address in the current. In the current tracker it could be as a standalone item. So I personally understand that commissioner's interest in having a careful look at the subject. That said, first of all we consider cost-effective demand side management to be a great resource, cost-effective demand side management. And we believe we have to have a set of policies in place that support acquisition of that resource. The LRAM or various other mechanisms is an important part of that. So we consider LRAM or something like that, in some states it's decoupling, in some in states it's moving more towards a fixed variable rate structure to be extremely important.

I think I'd add to that, Jonathan. I think on a going forward basis, I think we'd expect to see, let's say, '14 versus '13, we'd expect to see DSM revenues to be equivalent, but we wouldn't expect to see any increase in DSM lost revenue, if we capture, if you will, on year-over-year basis. And I will also want to caveat that we do not the have a final order yet on this matter.

So how would that work, I mean, if they, let's just say, we're just to strike it completely. And then, I guess, you lose recovery of that revenue that just kind of a regulatory lag that you'd have to wait to pickup until the next rate case. And then going forward any I guess additional clean energy efficiency or conservation would continue to kind of beat out your own returns until the next rate case picks up with the new sales kind of levels, is that how we look at it?

I think let's just put in this context, anything that wasn't recoverable, we would have to deal with that in the next rate case, that readjust if you will, our lost revenue from a DSM at that point in time, reset that.

And there is some confusion in the press, just is that the distinction between recovering the direct costs for the programs and then recovering the revenue that's lost, as a result of the programs, the effectiveness, there was some discussion at that commission, the likelihood of it is coming in for more frequent rate case. And we've talked about that in the past, that as I mentioned just a few moments ago, we are hopeful and as we have tried of manage costs for our customers, it's a preferable that we can stay out through good management of the business, through favorable tax results we've been able to receive on the federal side, through the deprecation adjustment. Those at least give some us some comfort where we sit right now going into next year, and again focus on the hydro acquisition, so an unintended consequence of eliminating the lost revenue adjustment that could be more frequent cases. And again, our investment is in the regulated utility business, that's where we put our capital, that's where we put our assets and serving our customers. We want to be able to continue that focus.

And the reason for the more frequent rate cases would be just kind of truing up the appropriate sales level, is that correct, Bob?

Yes, and that's kind of a lag situation that you're question suggested.

Brian, I don't think you mentioned it. But do you still plan to take down the remaining portion of the $100 million equity by yearend?

We will continue to utilize that facility. I won't commit to how much we'll use by yearend.

Is that dependent all upon the closing of the Bear Paw South? Is that what the impact in the timing at all there?

I would say, obviously, we're trying finance these transactions in line with expected long-term capital structure, so it would be a fact.

And then the effective tax rate for 2014 versus the 12% this year, any indication where we might be or is that something just to hang on until?

Jonathan, you have to give us something to talk about on EEI, but we'll give you guidance range at EEI on that matter.

Well, I'm surprised, you said for your guidance that the true range wouldn't be until February, are you going to release that at your Analyst Day?

We're just going to take in to increase a 10, maybe that's when we'll do it, Jon.

And then, I guess in line with the guidance and with Brian's question. So I guess, in Q3, you excluded the transaction cost for reaching the hydro agreement. But I guess in 2014, you plan on including I guess whatever ongoing transaction cost until it closes within your range?

That's a great question. Thanks for bringing it up. Just to clarify, we will be consistent. And we do expect to incur, of course, those cost, but we would exclude those from our adjusted EPS numbers. Just for a comparison purposes if you will '14 versus '13.

And at this time, there are no further questions.

Great. Well, thank you all very much. And I'll join Brian and looking forward to seeing you at the EEI Financial Conference and at Analysts Day in December. Thanks very much for your interest and support of company, and look forward to seeing you all soon. Take care.

This does conclude today's conference. We thank you for your participation.